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Life (or Death) Of An Orange County Restaurant Deal


How many of slices do I need to sell to pay a $7,000 rent?

Answer: At three dollars a slice, A lot!  I'm still negotiating the rent for this pizza place we are selling in Laguna Beach, California.  The location of this 750 sq ft establishment is right on Pacific Coast Highway and in the heart of down town Laguna Beach.

Originally I had the pizza shop listed and $150,000 with annual gross sales of $600,000, and after a week of being on the market had multiple offers.  As the buyers were doing there due diligence it kept falling apart, because the seller didn't have very good books and records and we were selling it in the off months, so visual observation wouldn't work.  Finally I convinced the seller that he could only sell it for what he could prove which roughly around $380,000 a year plus some was catering.

The listing created a lot of interest, because the seller was doing alright, but wasn't doing any delivery at all, which a new buyer could create some additional income.  I finally found an experienced buyer who could look into the seller's receipts, register tapes, and P&L reports and make sense of what the store was doing.

The buyers offered $100,000 with 50%, owner carry, and so we proceeded to contact the landlord.  I had to negotiate a new lease, because the current owner, my client was on a month-to-month lease (paying $5,200 a month).  While the store was on the market I had a few friends tip me off that the Mr. Landlord was actually trying to lease the space out, while we were trying to sell it, and it had been on the market for about 90 with no takers.  The landlord had it advertised for $6,250 and told all the potential leasee, that it of course excluded the fixtures and equipment that the present (my client) had in the store.  Well we finally set up a meeting between the Landlord and the Buyers.  The buyer Lives in Corona Del Mar and has about a million dollars in the bank, 5 $100,000 CDS, and a lot of experience"¦he is actually co-signing for his niece and her fiancĂ©"¦oh he also has Fico scores in the high 700s.  The Landlord sits down with my clients and says "The rent is $6,500 with about $350 in CAM charges and a cost of living of 3 to 4% a years."  The buyers flipped out, and walked.  The seller's temper went through the roof, and right before he could stop paying rent for a couple months, and loose his security deposit, the landlord served him with a 3 day write of pay or quit.

Well, I thought everything was pretty much dead, until the seller called and told me that the landlord served him with some legal papers saying he couldn't take out his fixtures and equipment and that he was just kicking him out"¦.(sounded a little funny to me, and I've been doing this for a while.)  A few days later I figured out that the buyers were planning to just give the seller $40,000 and then just take a new lease from the landlord with no escrow.  I reminded the buyers that they had signed a Non-Disclosure, which said for a year they couldn't purchase or AQCUIRE the business in any way.

Well, now I'm dealing with the Landlord's son, who is lawyer, negotiating on behalf of his father, and the seller still wants to sell, the buyers still want to buy (with a expectable lease, of course)"¦and so we'll see how everything works out"¦stay tuned . . .

About The Author: Joe Ranieri is a business broker in Orange County and tends to sell restaurant based businesses. See all his listings for sale and more info about his services or phone Joe direct at 714-292-5448 for a consultation on selling or buying a business.

Watch for more blog posts / articles from me in the future!


Categories: BizBen Blog Contributor, Deal And Escrow Issues



  Helpful Resources To Assist In Selling And Buying California Businesses
Mike Brewer: Liquor License Brokers, ABC Consulting Services

Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

William Park, Business Broker - Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Jack Oh, Business Broker - LA, Orange Counties

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989.

Steve Zimmerman: Restaurant Broker Specialist

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 900 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker - An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

Joe Ranieri, Business Broker, Orange & LA County Areas

Having owned retail/restaurant businesses for over 20 years, my interest turned to listing and selling businesses rather than owning them. I specialize tend to specialize in Orange County high volume restaurants, fast food independents and chains, bars and liquor stores. Call 714-292-5448.

Ryan Clark, Business Broker, Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan at 310-652-8353.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
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In this Discussion, Peter Siegel MBA (Business Purchase Financing Advisor at 866-270-6278) discusses financing of purchasing a small to mid-sized restaurant business (with or without real estate). When it comes to financing a restaurant, potential restaurant buyers have many options to choose from.

Selling Buying Used Restaurant Equipment-Tips For Restaurant Buyers, Sellers

The restaurant business is a tough business to be in, no one can dispute that, and so it's imperative that an owner's equipment is in good working condition. A new owner should make sure that the restaurant's equipment is in good working order before they close escrow. Joe Ranieri gives his tips.

Upgrading Liquor License: An Increase In Price When I Sell My Restaurant?

My restaurant recently upgraded its beer with wine license to a full-service liquor license, and if I sell, how much can that increase my selling price? Joe Ranieri, Southern California restaurant broker specialist initiates this discussion and other advisors, business brokers, agents weigh in.

What Are Some Tips In Ensuring A Smooth Transition When Buying A Business?

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Is Your First Offer Received Usually The Best Offer When Selling A Business?

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What Are Some Tips On Buying A Butcher Shop, Meat Market? Broker Gives Tips

Butcher shops, once a vestige, are increasingly becoming popular again in many metropolitan and suburban cities. In this Discussion Post on BizBen, Joe Ranieri (Orange County & LA County Business Broker) discusses various issues of buying a butcher shop and what that entails for business buyers.

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What Are Some Of The Best Tips On Buying An Existing Bakery Small Business?

Bakeries service all occasions from weddings, birthdays, retirement, and a whole host of other special occasions. Many bakeries do a brisk retail business, but really make their money in catering. Joe Ranieri a Southern California Business Broker looks at the top tips when trying to sell a bakery.

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